Top 10 Stories: Best stories, commentary Jan. 16-22 -- 1-22-99

AlexanderDavis

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ATHM, -0.86%
+Excite
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Juicing up the Net By Alexander Davis, CBS MarketWatch Last Update: Also see

REDWOOD CITY, Calif. (CBS.MW) -- Net naysayers are quick to point out how slow the Web remains. Indeed, the lack of high-speed access is commonly cited as the biggest drag on the Internet's growth, which is precisely why At Home Network (ATHM)
ATHM, -0.86%
pursued a deal to buy search portal Excite (XCIT)
xcit
for $6.7 billion. The pact, giving the provider of high-speed cable Internet connections access to millions of prospective customers, surpasses America Online's proposed $4 billion-plus takeover of Netscape Communications. Now that Excite and Netscape have big partners, the spotlight is on such portal site "orphans" as Lycos (LCOS)
lcos
and whether they'll find similar deals, analysts said.

WASHINGTON (CBS.MW) -- Republicans say he's stealing an old GOP idea. Democrats say it's just a way to give more working people access to the bull market's retirement fruits. Whatever he's up to,President Clinton says he's ready now to have the government invest some part of the Social Security Trust Fund in the stock market. It's a controversial scheme that envisions an independent government board wielding some $500 billion worth of tax-deferred individual retirement accounts in stock mutual funds.

SAN FRANCISCO (CBS.MW) -- It's not just the Big Three broadcast networks that are hurting. After a bullish season fueled by political campaign advertising, stocks of most independent television groups faced a fuzzy reception on Wall Street this quarter. Part of the problem: More money is flowing to other media. Advertisers seem to be "trying to use their media budgets perhaps a little more prudently," as one analyst put it. "And maybe they found that they could get better value elsewhere."

NEW YORK (CBS.MW) -- Marketers have brought their own, idiosyncratic touch to profiting from the World Wide Wonder. Nowadays, anyone who uses a Web site may get a reward as Internet brands embrace incentive programs to stand out from the pack. SportsLine USA (SPLN)
SPLN, -97.00%
is offering online chats with Tiger Woods or $1 million in prize money. Online brokers E-Trade (EGRP)
EGRP, +0.12%
and Schwab (SCH)
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are giving out frequent-flyer miles. E-Trade, which has the deeper of the two airline relationships,offers 5,000 frequent-flyer miles on United to new members. Maybe Web sites will start offering free toasters, a legendary lure of the banking industry.

SAN FRANCISCO (CBS.MW) --So jets won't slam into hillsides when the Y2K bug visits your town. There's still a year 2000 angle worth investors' time. That's the possible inability of large manufacturers to keep their factories humming and their assembly lines rolling. The doom-and-gloomers, naturally, would like to believe that more than warehouses, automobile plants and washing-machine makers will melt down when the millennium bug arrives. For investors, the trick might be to identify large and small manufacturers that just won't be able to handle the turn of the century. Otherwise, says analyst Kenneth Kim of Stone & McCarthy, skeptics are bucking a money flow into U.S. stocks that just won't quit.

SAN FRANCISCO (CBS.MW) -- Let me count the signs that Internet stocks are in Bubble-land, with a capital B: Fickle fish-meal processor Zapata (ZAP)
ZAP, +2.30%
decides to get back into the Internet space. Net executives sell shares at an unprecedented rate. Analysts set price targets just because earlier targets have been met. Or how about this -- the consumer-based Internet service provider is back in business in the IPO market? In addition to Internet America's successful offering last December, check out this parade of ISPs hoping to go public: Prodigy Communications, FlashNet Communications, OneMain.com and Pacific Internet.

SAN FRANCISCO (CBS.MW) -- What's been happening in Brazil during the past week emphasizes the huge risk of investing in the stock markets of emerging countries, most of which are in the midst of economic crisis. Sure, its stock market popped back up -- a bit. But look where it came from! Even with this rebound, if you invested in Brazil a half year ago, when the global currency crisis appeared to be calming down, you probably lost at least half your money. But is the other side of the coin not that if you correctly time the beginning of a turnaround in their economies, you can make a killing in their markets. Korea is an example of this. Its stock-market index peaked at 800 in July 1997, before the Asian crisis began, bottoming out in July 1998 at 300, and it's now back up to 700. But it is the big exception.

LOS ANGELES (CBS.MW) -- Next month, the government will overhaul the Consumer Price Index, largely in response to complaints that the current CPI overstates the rate of inflation. Don't blame me if I am skeptical about these efforts, but the last face lift to the CPI ended up costing taxpayers $1 trillion -- no kidding! A major component of the CPI (currently 20 percent) is housing costs. Until 1984, homeowners' costs within the CPI were calculated using mortgage interest rates and home prices. The Bureau of Labor Statistics, which compiles the CPI, basically calculated the costs of carrying a new mortgage on an average-priced home each month and used this as the measure of homeowners' cost of shelter. Between the onset of rising inflation and interest rates in 1965 and their peak in 1981, the total CPI rose a total of about 12 percentage points more than did the CPI, excluding homeowners' shelter costs. This overstatement of inflation caused widespread consternation among politicians. In response, the BLS reformulated the CPI. Mortgage rates and home prices, were out, and "homeowners' equivalent rents" were in.

NEW YORK (CBS.MW) -- There he goes again! Federal Reserve Chairman Alan Greenspan is worried -- for a change. Last July, the Fed chief was worried that people weren't worried. By early October, he was worried that investors were too worried (see column of Oct. 9). Now, once again, he's worried because not enough people are worried. Got that figured out? From here, it would appear that the Fed is between a rock and a hard place. For the moment, at least, monetary policy can only be on hold -- no matter what happens in the economy.

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